# Acala DEX Supply-side fees Methodology

## 1. Overview

Supply-side fees measures the portion of swap fees generated by Acala DEX that is distributed to liquidity providers. These fees serve as the primary incentive for participants to provide liquidity to the protocol's automated market maker (AMM) pools. On Acala DEX, the entirety of the collected swap fees is allocated to the supply side, meaning no portion of these fees is currently retained as protocol revenue.

## 2. Data sources

- **Blockchain events**: `Swap` events from the `dex` pallet, covering Acala Substrate
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Swap event extraction from Acala DEX

- **Purpose**: Capture all trading activity executed through Acala DEX liquidity pools.
- **Logic**: Successful `Swap` events are parsed from the `dex` pallet on Acala Substrate. For every transaction, the asset identifiers and raw amounts for both the incoming and outgoing assets are extracted. The trader's identity and extrinsic metadata are captured to ensure transaction integrity.
- **Key fields**: `amount_in`, `amount_out`, `token_in`, and `token_out`

### Component B: Normalization and USD conversion

- **Purpose**: Standardize raw transaction amounts into a common currency for aggregation.
- **Logic**: Raw amounts are normalized by decimal precision. For transactions involving Liquid DOT (LDOT), an exchange rate is derived by dividing the total underlying DOT backing the system (calculated as the sum of bonded and to-be-bonded DOT) by the total issuance of LDOT (including voided assets). Normalized amounts are then multiplied by end-of-day price feeds. Daily trading volume is determined based on the USD value of the swap assets.
- **Key fields**: `ldot_exchange_rate` and end-of-day price feeds

### Component C: Supply-side fee allocation for Acala DEX

- **Purpose**: Calculate the specific share of trading fees earned by service providers.
- **Logic**: Total fees are calculated as 3% of the daily trading volume. As the protocol does not currently activate a fee switch for treasury or governance retention, 100% of these generated fees are designated as supply-side fees. Data is aggregated at a daily granularity following UTC boundaries.

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Portion of fees distributed to service providers or supply-side participants.

Supply-side fees

Exchanges (DEX)

Collators aggregate parachain transactions block candidates and producing state transition proofs for validators based on those blocks.

Acala is a specialized stablecoin and liquidity blockchain powered by Polkadot Relay chain.

ACA holders own and govern the protocol. Acala’s investors include Pantera Capital, Coinbase Ventures, and Polychain Capital.

Acala DEX

Archived

Supply-side fees

Supply-side fees

Chain breakdown